The yield on the US 10-year Treasury note fell to 4.08% on Tuesday, retreating from nearly four-week highs reached on Monday, due to lower-than-expected government borrowing estimates and mixed signals from Fed officials. The US Treasury Department said it now expects to borrow $569 billion in Q4, $21 billion less than projected in July 2025, primarily because it began the period with a higher cash balance. Also, traders recalibrate expectations for a Fed rate cut in December, following conflicting remarks from policymakers. Chicago Fed President Goolsbee said he remains more concerned about inflation than employment, Governor Cook highlighted risks of further labor-market weakness, San Francisco Fed President Daly urged officials to “keep an open mind” and Governor Miran noted that policy remains restrictive. Markets now assign roughly a 70% probability to a 25bps rate cut next month, down from about 90% before last week’s FOMC meeting, but above the 60% seen earlier this week.
